Trade Brothers Constructios (P) Ltd., Belgaum V. Commissioner of Income Tax, Belgaum

ITA 54/PAN/2012

• Counselvise Citation: 5424114 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR LD
• Keywords: Business expenditure; Reasonable cause; Valuation report; Agreed addition; Revised return
• Section: 143(3); 27; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 54 /PNJ/2012 (ASSESSMENT YEAR - 2007 - 08 ) TARADE BROTHERS CONSTRUCTIONS (P) LTD. MAIN ROAD, RAIBAG, BELGAUM PIN: 591317 PAN:AAACT9110D (APPELLANT) VS. THE COMMISSIONER OF INCOME TAX, BELGAUM. (RESPONDENT) APPELLANT BY : SHRI VILAS S. HALBHAVI, CA. SHRI SHIVANAND V. HALBHAVI, CA. RESPONDENT BY : SHRI B. BARTHAKUR, LD. DR. DATE OF HEARING : 12/3 /2014 DATE OF PRONOUNCEMENT : 17 /04 /2014 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) BELGAUM, DATED 14 TH MAY, 2012 FOR THE A SSESSMENT Y EAR 2007 - 08 . 2. THE FOLLOWING GROUNDS ARE RAISED IN THIS APPEAL READ AS UNDER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LEARNED COMMISSIONER OF INCOME TAX, BELGAUM HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, THROUGH THERE IS NO CONCEALMENT OF INCOME BY THE APPELLANT. THE PENALTY IS LEVIED ON THE DECLARED ITEMS OF EXPENSES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX, BELGAUM HAS ERRED IN NOT CONSIDERING THE REPLY SUBMITTED ON 06.03.2012 AGAINST THE NOTICE PROPOSING TO LEVY PENALTY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER HAS FAILED TO PROVE THAT THE APPELLANTS HAS ACTED DELIBERATELY IN DEFIANCE OF LAW OR IS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST OR ACTED IN CONSCIOUS DISREGARD TO ITS OBLIGA TION. 2 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT 4. ANY OTHER GROUNDS WHICH MAY BE RAISED WITH KIND PERMISSION. PRAYER BEFORE THE HON. TRIBUNAL: THE PENALTY OF RS. 300135/ - MAY KINDLY BE DEL E TED FOR THE ACT OF WHICH THE APPELLANT REMAINS EVER GRATEFUL. 3. THE SHOR T FACTS OF THE CASE ARE THAT IN THE CASE OF THE ASSESSEE FOR A.Y.2007 - 08 ORDER U/S 263 WAS PASSED ON 10.0 2.2012. DURING THE COURSE OF PROCEEDING U/S.263 PENALTY PROCEEDINGS U/S. 271(1)(C) WERE INITIATED. DURING THE ASSESSMENT PROCEEDING T HE ASSESSEE HAS C LAIMED THE EXPENDITURE O N ACCOUNT OF TIPPER RENT OF RS. 4,80,000/ - , TRACTOR RENT OF RS. 2,40,00 0/ - AND ROAD ROLLER RENT OF RS. 2,40,000/ - . THE COMMISSIONER HAS VERIFIED THE RECORD AND HE WAS OF THE VIEW THAT AO H AS NOT EXAMINED THE APPLICABILITY OF SECTION 4 0(A)(IA) OF THE ACT. THEREFORE, ALLOWABILITY OF THESE CLAIM S MADE BY THE ASSESSEE WITHOUT MAKING NECESSARY ENQUIRY AND VERIFICATION IS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. THE COMMISSIONER U/S. 263 HAS GIVEN SHOW CAUSE NOTICE AND AFTER HEARING THE ASSESSEE HAS DISALLOWED THE EXPENDITURE U/S. 40(A)(IA) TOTALLING TO RS. 9,60,000/ - . THE AUTHORISED REPRESENTATIVE WAS U NA BLE TO EXPLAIN THE SAME, THEREFORE, THE COMMISSIONER WAS OF THE VIEW THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME SO IT ATTRACTS THE PENALTY U/S. 271 (1) (C) OF THE ACT. THE SHOW CAUSE NOTICE WAS GIVEN AND THE ASSESSEE HAS ACCEPTED THE ADDITION D UE TO THE CHANGE OF INTERPRETATION/INFORMATION AND TO AVOID FURTHER LITIGATION AND PENAL CONSEQUENCES. THE ASSESSEE W AS UNABLE TO EXPLAIN BEFORE THE COMMISSIONER, THEREFORE, HE IMPOSED THE PENALTY BY OBSERVING AS UNDER: CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE AND AS AVAILABLE ON RECORD THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME FOR THE A.Y. 2007 - 08 TO THE EXTENT OF RS. 9,80,828/ - WHICH IS ELABORATELY DISCUSSED IN THE ORDER U/S 263 DATED 10 - 2 - 2012. TH E ASSESSEE IS LIABLE FOR PENALTY U/S. 271(1)(C) FOR HAVING FURNISHED INACCURATE OF PARTICULARS OF INCOME. THE TAX CHARGEABLE ON THE IMPUGNED SUM OF RS.9,80,828/ - IS RS.3,00,135/ - . THIS IS THE THE AMOUNT OF TAX SOUGHT TO BE EVADED. PENALTY IS IMPOSED ON T HE ASSESSEE U/S. 271(1)(C) FOR A.Y.2007 - 08 OF RS. 3,00,135/ - WHICH IS EQUAL TO THE AMO UNT OF TAX SOUGHT TO BE EVADED. 3 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT 4. THE LEARNED AR FILED THE WRITTEN SUBMISSION WHICH READ AS UNDER: THE APPELLANT RESPECTFULLY SUBMIT AS BELOW. 1) THE LEARNED CIT, BELGAUM HAS ERRED IN IMPOSING PENALTY U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 AS IT IS AGREED ADDITION, AGREED BEFORE THE LEARNED CIT DURING 263 PROCEEDINGS [WHICH HAS BEEN REFLECTED IN ORDER U/S 263 & ORDER U/S 271(1)(C)]. ADDITION OF EXPENDITURE CLAIM ED WHERE THE TDS WAS NOT MADE AS REQUIRED U/S 40(A)(IA), WAS WITH AN INTENTION TO AVOID FURTHER LITIGATION WITH THE DEPARTMENT AND ALSO TO AVOID PENAL PROCEEDINGS. THE LEARNED AO ACIT, CIRCLE 2, BELGAUM HAD VERIFIED THESE EXPENDITURES AND HAD NOT DISALLOWE D THESE EXPENDITURE AS TDS WAS NOT REQUIRED ON THESE EXPENDITURES. BUT SINCE THE MATTER WAS SUCH THAT THERE COULD HAVE BEEN A CONTRARY VIEW, AS TAKEN BY LEARNED CIT, BELGAUM, THE ASSESSEE AGREED FOR DISALLOWANCE AS REFERRED ABOVE. RELIANCE IN PLACED ON THE FOLLOWING DECISIONS: [2012] 341 ITR 235 (KAR) [2011] 07 ITR(TRIB) 459 (CHENNAI) IN [2010] 327 ITR 233 (KAR), IT WAS HELD THAT: WHERE ASSESSEE AGREED TO ACCEPT REPORT OF DVO AND AGREED FOR ADDITION OF DIFFERENCE BETWEEN COST DECLARED BY HIM AND COM PUTED BY OVO AND ASSESSEES CONTENTION THAT VALUATION REPORT WAS ACCEPTED AND TAX HAD BEEN PAID ON DIFFERENCE AMOUNT TO BUY PEACE AND TO AVOID LITIGATION WAS ACCEPTED BY BOTH COMMISSIONER (APPEALS) AND TRIBUNAL, DELETION OF PENALTY IMPOSED ON ASSESSEE WAS JUSTIFIED [IN FAVOUR OF ASSESSEE] 2) MERELY BECAUSE ASSESSEE HAD CLAIMED EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO REVENUE, THAT BY ITSELF WOULD NOT ATTRACT PENALTY UNDER SECTION 271(1)(C). RELIANCE IS PLACED ON [2010] 322 ITR 15 8 (SC) A GLANCE OF PROVISION OF SECTION 271(1)(C) WOULD SUGGEST THAT IN ORDER TO BE COVERED, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. TH E INSTANT CASE WAS NOT THE CASE OF CONCEALMENT OF THE INCOME. THAT WAS NOT THE CASE OF THE REVENUE EITHER, IT WAS AN ADMITTED POSITION IN THE INSTANT CASE THAT NO INFORMATION GIVEN IN THE RETURN WAS FOUND TO BE INCORRECT OR INACCURATE. IT WAS NOT AS IF ANY STATEMENT MADE OR ANY DETAIL SUPPLIED WAS FOUND TO BE FACTUALLY INCORRECT. HENCE, AT LEAST, PRIMA FACIE, THE ASSESSEE COULD NOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS. THE REVENUE ARGUED THAT SUBMITTING AN INCORRECT CLAIM IN LAW FOR THE EXPEN DITURE ON INTEREST WOULD AMOUNT TO GIVING INACCURATE PARTICULARS OF SUCH INCOME. SUCH CANNOT BE THE INTERPRETATION OF THE CONCERNED WORDS, THE WORDS ARE PLAIN AND SIMPLE. IN ORDER TO EXPOSE THE ASSESSEE TO THE PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY ANY STRETCH OF IMAGINATION, MAKING AN INCORRECT CLAIM IN LAW CANNOT TANTAMOUNT TO FURNISHING OF INACCURATE PARTICULARS. [PARA 7] 4 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT THEREFORE, IT MUST BE SHOWN THAT THE CONDITIONS UNDER SECTION 271(1 )(C) EXIST BEFORE THE PENALTY IS IMPOSED. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED, BECAUSE THAT IS THE ONLY DOCUMENT, WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INA CCURATE, THE LIABILITY WOULD ARISE. [PARA 8] THE WORD PARTICULARS MUST MEAN THE DETAILS SUPPLIED IN THE RETURN, WHICH ARE NOT ACCURATE, NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS. IN THE INSTANT CASE, THERE WAS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN WERE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE. SUCH NOT BEING THE CASE, THERE WOULD BE NO QUESTION OF INVITING THE PENALTY UNDER SECTION 271(1)(C). A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTAINABLE IN LAW BY ITS ELF WILL NOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANNOT AMOUNT TO THE INACCURATE PARTICULARS 3) IN THE INSTANT CASE THE ASSESSEE HAD NOT CONCEALED ANY INCOME. THE ADDITION IS DUE TO DISALLOWANCE OF EXPENDITURE CLAIMED IN RETURN OF INCOME AS STATED IN PARA 1 ABOVE. WHERE NO CASE FOR CONCEALMENT OF INCOME IN RESPECT OF ANY ADDITION MADE BY ASSESSING OFFICER WAS FOUND, PENALTY LEVIED UNDER SECTION 271(1)(C) WAS TO BE DELETED. AS H ELD IN [2011 11 ITR(TRIB) 384 (MUM). 4) IN THE INSTANT CASE THE LD. CIT, BELGAUM, HAS LEVIED PENALTY ON THE GROUND THE ASSESSEE HAS INCORRECTLY CLAIMED DEDUCTION OF EXPENDITURE WHICH WAS NOT ALLOWED AS PER LAW. THE PUNE BENCH OF TRIBUNAL HAS INTERPRETED S ECTION 271(1)(C) IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. V. DY. CIT [20091 31 SOT 153 (PUNE), AS FOLLOWS: INTERPRETATION OF SECTION 271(1)(C) THE SCHEME OF SECTION 271(1)( C) VISUALIZES IMPOSITION OF PENALTY WHEN THE ASSESSEE HAS CONCEALED INCOME OR WH EN THE ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME. IN ADDITION TO THESE TWO SITUATIONS, PENALTY CAN ALSO BE IMPOSED, INTER ALIA, WHEN THE ASSESSEE IS DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME UNDER THE EXPLANATION 1 TO SECTION 271(1)( C ). THIS EXPLANATION PROVIDES THAT THE ASSESSEE WILL BE DEEMED TO HAVE CONCEALED PARTICULARS OF INCOME WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT (I) THE ASSESSEE FAILS TO PROVIDE AN EXPLANAT ION; (II) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH IS FOUND TO BE FALSE; AND (III) WHEN THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE FALLS TO PROVE THAT THE EXPLANATION WAS BONA FIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. THE EXPRESSION CONCEALMENT OF INCOME HAS NOT BEEN DEFINED IN THE ACT BUT THE NATURAL MEANINGS OF THE EXPRESSION CONCEALMENT ARE TO KEEP FROM BEING SEEN, FOUND, OBSERVED, OR DISCOVERED, IT WOULD, THEREFORE, FOLLOW THAT THE EXPRESSION CONCEALMENT OF I NCOME, IN ITS NATURAL SENSE AND GRAMMATICAL MEANING, IMPLIES THAT AN INCOME IS BEING HIDDEN, CAMOUFLAGED OR COVERED UP SO THAT IT CANNOT BE SEEN, FOUND, OBSERVED OR DISCOVERED. THAT WAS CERTAINLY NOT THE SITUATION IN THE INSTANT CASE. THE ASSESSEE HAD MAD E A CLAIM, AND THAT TOO BY REVISED RETURN, WHICH VIRTUALLY ENSURED THAT THE FACT OF THE ASSESSEE HAVING MADE THIS CLAIM COULD NOT REMAIN UNNOTICED BY THE ASSESSING OFFICER, AND HAD GIVEN SPECIFIC JUSTIFICATION AND ALL THE SUPPORTING DETAILS FOR THE SAME. B Y NO STRETCH OF LOGIC, THIS SITUATION COULD BE TREATED AS 5 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT A SITUATION IN WHICH ANY INCOME WAS CONCEALED BY THE ASSESSEE. CONCEALMENT OF AN INCOME BY AN ASSESSEE CANNOT BE A PASSIVE SITUATION ANYWAY; IT IMPLIES THAT THE PERSON CONCEALING THE INCOME IS HIDIN G, COVERING UP OR CAMOUFLAGING AN INCOME - SOMETHING WHICH ESSENTIALLY REQUIRES A CONSCIOUS EFFORT. ON THE CONTRARY, THE ASSESSEE HAD ACTED IN VERY TRANSPARENT AND STRAIGHTFORWARD MANNER. THERE COULD NOT BE ANY CONCEALMENT OF INCOME IN SUCH A SITUATION. T HE EXPRESSION FURNISHING OF INACCURATE PARTICULARS OF INCOME HAS ALSO NOT BEEN DEFINED IN THE ACT. THE EXPRESSION INACCURATE REFERS TO NOT IN CONFORMITY WITH THE FACT OR TRUTH AND THAT IS THE MEANING WHICH IS RELEVANT IN THE CONTEXT OF FURNISHING OF INACCURATE PARTICULARS. THE EXPRESSION PAR TICULARS REFERS TO FACTS, DETAI LS, SPECIFICS, OR INFORMATION ABOUT SOMEONE OR SOMETHING. THEREFORE, THE PLAIN MEANING OF THE EXPRESSION FURNISHING OF INACCURATE PARTICULARS OF INCOME IMPLIES FURNISHING OF DET AILS OR INFORMATION ABOUT INCOME WHICH ARE NOT IN CONFORMITY WITH F ACTS OR TRUTH. THE DETAILS OR IN FORMATION ABOUT INCOME DEAL WITH FACTUAL DETAILS OF INCOME AND THIS CANNOT BE EXTENDED TO AREAS WHICH ARE SUBJECTIVE, SUCH AS STATUS OF TAXABILITY OF AN INCO ME, ADMISSIBILITY OF A DEDUCTION AND INTERPRETATION OF LAW . THE FURNISHING OF INACCURATE INFORMATION, THUS, RELATES TO FURNISHING OF FACTUALLY THE CORR ECT DETAILS AND IN FORMATION ABOUT IN COME. IN THE INSTANT CASE, WHAT HAD BEEN TREATED AS FURNISHING OF INA CCURATE PARTICULARS WAS MAKING OF A CLAIM WHICH WAS NOT ADMITTED BY THE ASSESSING OFFICER - AN ACTION NOT CONTESTED BY THE ASSESSEE. THE ADMISSION OR REJECTION OF A CLAIM IS A SUBJECTIVE EXERCISE; WHETHER A CLAIM IS ACCEPTED OR REJECTED HAS NOTHING TO DO W ITH FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE AUTHORITIES HAD APPARENTLY PROCEEDED TO TREAT THE ASSESSEES MAKMG AN INCORRECT CLAIM OF INCOME AS FURNISHING OF INACCURATE PARTICULARS. WHAT IS A CORRECT CLAIM AND WHAT IS AN INCORRECT CLAIM IS A MAT TER OF PERCEPTION. RAISING A LEGAL CLAIM, EVEN IF IT IS ULTIMATELY FOUND TO BE LEGALLY UNACCEPTABLE, CANNOT AMOUNT TO FURNISHING OF INACCURATE PARTICULARS OF INCOME. INACCURATE IS SOMETHING FACTUALLY INCORRECT AND INTERPRETATION OF LAW CAN NEVER BE A FAC TUAL ASPECT. JUST BECAUSE AN ASSESSING OFFICER DOES NOT ACCEPT AN INTERPRETATION, SUCH AN INTERPRETATION IS NOT RENDERED INCORRECT. EVEN THE JUDGMENTS OF THE SUPREME COURT ARE REVERSED BY THE LARGER BENCHES OF THE SUPREME COURT. THE DEVELOPMENT OF LAW IS A DYNAMIC PROCESS WHICH IS AFFECTED BY THE INNUMERABLE FACTORS, AND IT IS ALWAYS AN ONGOING EXERCISE, IN SUCH CIRCUMSTANCES, A BONA FIDE LEGAL CLAIM BY THE ASSESSEE BEING VISITED WITH PENAL CONSEQUENCES ONLY BECAUSE IT HAS NOT BEEN ACCEPTED THUS FAR BY THE TAX AUTHORITIES OR JUDICIAL AUTHORITIES IS AN ABSURDITY. IN ANY EVENT, SINCE THE CONNOTATIONS OF EXPRESSION PARTICULARS OF INCOME DO NOT EXTEND TO THE ISSUES OF INTERPRETATION OF LAW, MAKING A CLAIM, WHICH IS FOUND TO BE UNACCEPTABLE, IN LAW, CANNOT BE T REATED AS FURNISHING OF INACCURATE PARTICULARS OF INCOME. THEREFORE, THE INSTANT CASE COULD NOT BE SAID TO BE A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME, IN ITS NATURAL SENSE, EITHER. THERE IS ONE MORE EVENTUALITY IN WHICH PENALTY CAN BE IM POSED AND THAT IS THE SITUATION IN WHICH DEEMING FICTION OF THE EXPLANATION 1 TO SECTION 27T(1)( C) COMES INTO PLAY. THIS DEEMING FICTION COMES INTO PLAY WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER TH IS ACT (I) THE ASSESSEE FAILS TO PROVIDE AN EXPLANATION; (II) THE ASSESSEE PROVIDES AN EXPLANATION WHICH IS FOUND TO BE FALSE; AND (III) THE ASSESSEE PROVIDES AN EXPLANATION WHICH HE FAILS TO SUBSTANTIATE AND HE FAILS TO PROVE THAT THE EXPLANATION WAS BONA TIDE AND THAT ALL THE FACTS NECESSARY FOR THE SAME AND MATERIAL FOR COMPUTATION OF INCOME HAVE BEEN DULY DISCLOSED BY THE ASSESSEE. EVEN A CASUAL LOOK AT THE PROVISION FOR DEEMING FICTION OF EXPLANATION 1 TO SECTION 271(1)( C) WOULD SHOW THAT IT RELATES O NLY TO THE FACTUAL ASPECTS. THE OPENING WORDS EMPLOYED 6 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT IN THIS DEEMING FICTION ARE WHERE IN RESPECT OF ANY FACTS MATERIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSON UNDER THIS ACT. IN THE INSTANT CASE, THE ONLY CONTROVERSY WAS REGARDING LEGALIT Y OF A CLAIM MADE BY THE ASSESSEE AND, THEREFORE, THIS DEEMING FICTION CANNOT BE INVOKED IN THE INSTANT CASE AT ALL. THE DEEMING FICTION OF THE EXPLANATION 1 TO SECTION 271(1)( C) CAN ONLY BE PRESSED INTO SERVICE IN CONNECTION WITH FACTS MATERIAL TO THE C OMPUTATION OF INCOME AND NOT IN CONNECTION WITH TH E COMPUTATION OF INCOME PER SE. 5) THE ASSESSEE WAS UNDER THE BONA TIDE BELIEF THAT THE TDS PROVISIONS WERE NOT APPLICABLE FOR RENT PAYMENT FOR HIRE OF TIPPER, ROAD ROLLER AND TRACTOR. ASSESSEE WAS UNDER SUCH A BONA FIDE BELIEF AS THE PROVISIONS OF TDS FOR SUCH PAYMENTS WERE NOT APPLICABLE IN EARLIER YEARS. EXPLANATION (I) TO SECTION 194 - 1 OF THE INCOME TAX, 1961 WAS AMENDED W.E.F. 13 - 07 - 2006 TO INCLUDE MACHINERY, PLANT & EQUIPMENT. FURTHER SUB CLAUSE ( IA) OF CLAUSE (A) OF SECTION 40 OF THE INCOME TAX ACT, 1961 WAS AMENDED W.E.F. 01/04/2006 TO INCLUDE RENT & ROYALTY. ASSESSEE WAS NOT AWARE OF LATEST AMENDMENTS AND HENCE WAS UNDER A BONA FIDE BELIEF THAT TDS PROVISIONS WERE NOT APPLICABLE FOR RENT PAYME NT FOR HIRE OF TIPPER, ROAD ROLLER & TRACTOR AND ALSO WAS UNDER A BONA FIDE BELIEF THAT SUCH EXPENDITURE SHALL NOT BE DISALLOWED U/S 40(A)(IA). FURTHER AS PER PROVISO TO SECTION 40(A)(IA): PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUC TED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS B EEN PAID. IN THE CASES FOR DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) THERE SHALL BE NO TAX EVASION IF THE TAX IS DEDUCTED AND PAID IN ANY SUBSEQUENT YEAR. AS SUCH EXPENDITURE WHICH NOT CLAIMED IN THE ASSESSMENT YEAR UNDER QUESTION CAN BE CLAIMED IN SUCH S UBSEQUENT YEAR WHEN THE TAX PAYMENT IS MADE. ASSESSEE IN THIS CASE HAS MADE THE PAYMENT OF TDS, ON RENT AMOUNT OF 960000/ - , ON 26/03/2012 WITH APPLICABLE INTEREST UNDER TDS PROVISIONS. RELIANCE IS PLACED ON FOLLOWING DECISIONS: I) IN THE CASE OF GAEKWAD RE AL E STATE TRADERS VS ITO [1990] 35 I TD 384 (AHD.), IT WAS HELD THAT: ............... IT COULD NOT BE SAID THAT ASSESSEE ADOPTED DEVICE TO REDUCE THE INCIDENCE OF TAX. THEREFORE, THE ONLY INFERENCE WHICH COULD BE DRAWN WAS THAT THERE WAS BONA FIDE BELIEF WHICH WAS HONESTLY CONCEIVED AND THAT WOULD NOT ENTAIL PENALTY ......... II) IN THE CASE OF ITO VS R.B.G.M. MODI & BROS. (P.) LTD [1989] 28 LTD 349 (DELHI), IT WAS HELD THAT: ..WHEN THE INTEREST WAS WAIVED UND ER SECTION 215 BY THE ASSESSEE O N THE GROUND T HAT IT HAD REASONABLE CAUSE FO R NOT DISCLOSING THIS COMMISSION MEANING THEREBY AT LEAST IMPLIEDLY THAT 7 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT THE ASSESSEE ENTERTAINED A BONA FIDE BELIEF ABOUT THE NON - RECEIPT OF COMMISSION, THERE WAS NO JUSTIFICATION FOR LE VY OF PENALTY UNDER SECTION 271(1 )(C) O R UNDER SECTION 273. 6) COPY OF LETTER FILED BEFORE THE LEARNED CIT DATED 06/03/2012 AS A REPLY TO NOTICE U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 HAS BEEN ENCLOSED. 7) AS ACCEPTED B EFORE THE LEARNED CIT, THE APPELL ANT HAS PAID THE TAX ON THE AGREED ADDITION REFERRED ABOVE. PROOF OF SUBMISSION OF CHALLAN FOR TAX AND PENALTY PAID HAS BEEN ENCLOSED. FURTHER THE APPELLANT HAS ALSO DEDUCTED AND PAID THE TDS APPLICABLE TO THE SAID EXPENDITURE (CHALLAN ENCLOSED). PRAYER: THE APPEAL MAY KINDLY BE CONSIDERED IN FAVOR OF THE APPELLANT TO MEET THE ENDS O F JUSTICE, FOR THE KIND ACT OF Y OUR HONOR THE APPELLANT REMAINS EVER GRATEFUL. THE AR FILED THE FURTHER WRITTEN SUBMISSION WHICH READ AS UNDER: IN CONTINUATION OF EARLIER SUBMISSIONS IN WRITING, APPELLANT RESPECTFULLY SUBMIT AS BELOW: 1. IN THE INSTANT CASE PENALTY U/S 271(1)(C) HAS BEEN LEVIED BY THE LD CIT. BELGAUM. THIS PENALTY HAS BEEN LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA). 2. WE WISH TO PLACE FURTHER RELIANCE ON FOLLOWING DECISIONS : A. ITO, VAPI WAR D - 4, DAMAN VS M/S LUCKY STAR INT ERNATION AL - ITA NO. 1041/AHD/2010. THE FACTS OF THE INSTANT CASE ARE SIMILAR, I.E., PENALTY U/S 271(1)(C) OF THE IT ACT HAS BEEN LEVIED ON ACCOUNT OF DISALLOWANCE MADE U/S 40(A)(IA) OF THE IT ACT. W HEREIN THE HON. ITAT, HELD THAT: WE ARE OF THE VIEW THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS OF THE CASE, CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE CITATIONS REFERRED TO BY THE ASSESSEE BEFORE HIM, HAS RIGHTLY DELETED T HE PENA LTY AND WE FIND NO JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LEARNED CIT(A) DELETING THE PENALTY IN THE MATTER IN THE ABSENCE OF ANY MATERIAL PRODUCED BY THE LEARNED DR TO CONTROVERT THE SAME. WE CONFIRM HIS FINDINGS. THERE IS NO MERIT IN THE GROUND O F APPEAL OF THE REVENUE. TH E SAME IS ACCORDINGLY DISMIS S ED B . ACIT, CIRCLE 3(1), HYDERABAD VS M/S SEAWAYS SHIPPING LTD. SECUNDERABAD ITA NO 80/H/2011. HELD: 8 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT AT THE TIME OF HEARING ON 16.6.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THE DEPARTMENTAL REPRESENTATIVE. IN THIS CASE, PENALTY IS LEVIED FOR DISALL OWANCE OF EXPENDITURE U/S 40(A)(I A) OF THE INCOME TAX ACT. NON DEDUCTION OF TDS BY THE ASSESSEE WAS RESULTED IN DISALLOWANCE OF EXPENDITURE U/ S 40(A) (IA), THAT ITSELF CANNOT BE CONSTRU ED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTED IN DISALLOWANCE OF EXPENDITURE. IN OUR OPINION, THE MISTAKE COMMITTED BY THE ASSESSEE WAS COMPENSATED BY DISALLOWING THE EXPEND ITURE. FURTHER, THE REVENUE CANNOT PENALISE THE ASSESSEE BY LEVYING PENALTY U/S 271(1) (C) OF THE ACT. IN ORDER TO LEVY PENALTY U/S 27 1(1)(C) OF THE ACT, THERE HAS TO BE CONCEALMENT OF PARTICULARS OF INCOME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FURNISH ED INACCURATE PARTICULARS OF ITS INCOME. PRESENT IS NOT THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE DEPARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHED AN Y FACTUAL INCORRECT INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR OPINION, THE CONDITIONS LAID DOWN IN SECTION 2 71(1) (C) OF THE ACT IS RIOT COMPLIED WITH. BEING SO, LEVY OF PENALTY IS NOT JUSTIFIED M ERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE THAT EXPENDITURE IS NOT ELIGIBLE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AMID FOR THAT REASON, EXPENDITURE IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF TH E EXPENDITURE WHICH IS NOT SUSTAINABLE AND DELETION OF PENALTY BY THE IT(A) IS JUST IFIED. WE PLACE RELIA NCE ON THE JUDGEMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (322 ITR 158) (SC). ACCORDINGLY THE GROUND RAI SED BY THE REVENUE HOLDS NO MERIT. C. DCIT VS ASIAN HOTELS LTD - 2011 - TIOL - 795 - ITAT - DEL(ITA NO. 3820/DEL/2010 DATED JANUARY,7, 2011): WHEREIN IT WAS HELD AS UNDER: INCOME TAX - SE CTIONS 40(A) (IA), 271 (1) (C) - WHETHER PENALTY IS LEVIABLE IN A CASE WHERE THE SUBSTANTIAL RETURNED INCOME PROVES THE BONAFIDE OF ASSESSEE VI S - - VIS DISALLOWANCE OF 40(A) (IA ). ASSESSEE COMPANY FIL ED ITS RETURN OF INCOME ON 22 DECEMBER 2003 DECLARING AN INCOME OF RS. 6.32 CRORES. AN ASSESSME NT WAS PASSED U/S 143(3) ON 30 TH MARCH 2006 WHEREBY TOTAL INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.11. 53CRORES. DURING THE COU RSE OF ASSESSMENT PROCEEDING LD. AO FOUND THAT THE ASSE SSEE HAD MADE THE PROVISIONS IN RESPECT OF CERTAIN FOREIGN PAYMENTS AND CLAIMED THESE PROVISIONS W ITHOUT DEDUCTING CORRESPONDING TDS. AO DISALLOWED THIS CLAIM OF ASSESSEE AND LEVIED PENALTY UNDER SECTION 2 71 (1) (C), RELYING UPON THE DECISI ON OF RELIANCE (2010 - TIOL - 21 - SC - II,) CIT(A) DELETED THE PENALTY - MATTER R EACHED TO THE ITA T. AFTER HEARING THE P ARTIES THE ITA T HELD AS UNDER, ++ THERE IS NO DOUBT THAT THE CLAIM MADE BY THE ASSESSEE IS IN RESPECT OF BUSINESS EXPENSES. HAD THE ASSESSEE DEDUCTED THE TDS AND PAID IT TO THE GOVT. AMOUNT THEN ITS DEDUCTION COULD BE ALLOWED. ACCORDING TO THE ASSESSEE I T HAS PAID THE TAX ALSO IN THE NEXT YEAR FOR THE SUM OF RS. 7,07,294/ - AND EVEN THEREAFTER DEDUCTION WAS NOT GRANTED TO IT. LD. FIRST APPELLATE AUTHORITY HAS ACCEPTED THE PLEA OF ASSESSEE THAT IT WAS A BONAFIDE ERROR; ++ TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES PARTICULARLY THE AMOUNT OF DISALLOWANCE VIS A VIS THE RETURNED INCOME, WE ARE OF THE VIEW THAT IT IS A 9 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT BONAFIDE LAPSE AT THE END OF THE ASSESSEE. THERE IS NO DELIBERATE ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME. LD. CIT(A) HAS RIGHTLY APPRECIATED THE FACTS AND CIRCUMSTANCES WE DO NOT SEE ANY REASON TO INTERFERE IN HIS ORDER. 3. ASSESSEE HAS ALREADY PAID THE APPLICABLE TDS VIDE CHALLAN NO 18344 ON 26 - 03 - 2012 AT STATE BANK INDIA (BSR CODE 0004329). PRAYER : THE APPEAL MAY KINDLY BE CONSIDERED IN FAVOUR OF THE APPELLANT TO MEET THE ENDS OF JUSTICE, FOR THE KIND ACT OF YOUR HONOR THE A PPELLANT REMAINS EVER GRATEFUL. 5. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE FACT S OF THE CASE IS THAT DURING THE PROCEEDING U/S. 263 THE COMMISSIONER HAS PASSED THE ORDER U/S. 271(1)(C). DURING THE PROCEEDINGS THE ASSESSEE HAS CLAIMED THREE EXPENDITURE I.E. TIPPER RENT OF R S. 4,80,000/ - , TRACTOR RENT OF RS. 2,40,000/ - AND ROAD ROLLER RENT OF RS. 2,40,000/ - BEFORE TH E AO. DURING THE COURSE OF HEARING THE ASSE SSEE AGREED FOR DISALLOWANCE OF TH ESE THREE EXPENDITURE S ON THE GROUND THAT THERE ARE VARIOUS CONTRARY VIEW THEREFORE, THE ASSESSEE HAS AGREED FOR DISALLOWANCE OF THIS EXPENDITURE AS STATED ABOVE. THE COMMISSIONER HAS IMPOSED THE PENALTY U/S. 271(1)(C) ON THE GROUND THAT ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME DURING THE ASSESSMENT PROCEEDING. WE FIND THAT WH E N THE ADDITION IS MADE OF EXPENDITURE CLAIMED WHERE THE TDS WAS NOT MADE AS REQUIRED U/S. 40(A)(IA) , W HETHER THE PENALTY CAN BE IMPOSED OR NOT , FOR THAT THE ASSESSEE HAS PRODUCED THE VARIOUS DECISION OF T RIBUNAL. THE ASSESSEE HAS PRODUCED THE DECISION OF AHMEDABAD TRIB UNAL IN THE CASE OF ITO VS. LU CKY STAR INTE R NATION AL, IN ITA NO. 104 1/AHD/ 2 010. THE ASSESSEE HAS ALSO PRODUCED THE DECISION OF HYDERABAD A BENCH IN ITA NO. 80 /H/ 2011. WE HAVE GONE THRO UGH THE DECISION OF THE TRIBUNAL IN ITA NO.1041/AHD/ 2010, WHEREIN IT HAS HELD AS UNDER. 3.2. W ITH REGARD TO FEES AND LEGAL EXPENSES IN RESPECT OF PAYMENT OF PROFESSIONAL FEES TO S.V. NENE & CO. OF RS. 1,10,200/ - IT WAS SUBMITTED BY 10 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT THE ASSESSEE THAT PROVISIONS OF SECTION 40(A)(IA) OF THE IT ACT CAME INTO FORCE FOR THE FIRST TIME FOR THE PREVIOUS YEAR PERTAINING TO A.Y 2006 - 07, THE ASSESSEE FIRM FAILED TO COMPLY WITH THE SAME AND A LENIENT VIEW SHOULD BE TAKEN SO FAR AS THE DISALLOWANCE IS CONCERNED. IN RESPECT OF PENALTY PROCEEDINGS, IT WAS SUB MITTED THAT GENUINENESS OF THE EXPENDITURE IS NOT DOUBTED AND NO INACCURATE PARTICULARS HAVE BEEN FOUND AND THE EXPLANATION OFFERED BY THE ASSESSEE HAS NOT BEEN PROVED TO BE UNSATISFACTORY AND THEREFORE, PENALTY SHOULD NOT BE LEVIED. IN SUPPORT OF HIS ABOVE CONTENTION S, THE ASSESSEE REFERRED TO THE DECISIONS IN THE CASE OF TWINS STAR JUPITAR CO - OP. HOUSING SOCIETY LTD. VS ITO, 118 IDT, STAR INTERNATIONAL PVT. LTD. VS ACIT, 308 ITR 33 AND MAHAVIR IRRIGATION PVT. LTD. 117 LTD 9. 4. THE LEARNED CIT(A) CONSIDERING THE SUB MISSIONS MADE BY THE ASSESSEE AND THE PENALTY ORDER AND BY REFERRING TO THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CHAIRMAN, SEBI VS SRIRAM MUTUAL FUND & ANR. (2006) SCC 361, WHEREIN IT HAS BEEN INTER A LIA HELD T HAT WHILE CONSIDERING AN APPE AL AGAINST AN ORDER U/S. 271(1) (C) WHAT IS REQUIRED TO BE EXAMINED IS THE RECORD WHICH THE OFFICER IMPOSING THE PENALTY HAD BEFORE HIM AND IF THAT RECORD COULD SUSTAIN THE FINDING THAT THERE HAD BEEN CONCEALMENT, THAT WOULD BE SUFFICIENT TO SUSTAIN THE PE NALTY. PENALTY CAN BE LEVIED IN TWO SITUATIONS CONCEALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS OF INCOME. CONCEALMENT REFERS TO DELIBERATE ACT ON THE PART OF THE ASSESSEE WHICH IS DIRECT. A MERE OMISSION OR NEGLIGENCE WOULD NOT CONSTITUTE A DELIBERATE ACT OF SUPPRESSION VERY OR SUGGESTION FALSE. THAT BRINGS OUT THE ISSUE WHETHER NON - DEDUCTION OF TAX AT SOURCE AMOUNTS TO FURNISHING OF INACCURATE PARTICULARS OF INCOME AS REQUIRED BY THE PROVISIONS U/S. 271 (1) (C)? HELD THAT IT I S NOT A CASE W HERE PENALTY IS MANDATORY IMPOSABTE. THE ASSESSEE SUFFERED TAX ON THE AMOUNT OF EXPENSES SUBJECT TO TDS BEING NOT DEDUCTED AND CONSIDERING THE FACT THA T DISALLOWANCE MADE U/S 40(A) (I A) OF THE IT ACT IS TECHNICAL IN NATURE DELETED THE PENALTY. 5. BEING AGGRIEVED AND DISSATISFIED WITH THE ABOVE FINDINGS OF THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE LEARNED BOTH THE PARTIES, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIALS ON RECORD. DURING THE COURSE OF HEARING OF THE APPEAL THE LEARNED DR RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. ON THE OTHER HAND, THE LEARNED AR REFERRING TO PARA 3 AND 4 OF THE PENALTY ORDER, SUBMITTED THAT ALL THE ADDITIONS IN RESPECT OF COMMI SSION EXPENSES OF RS.10,46,163/ - , CLEARING AND FORWARDING EXPEN SES OF RS.2,01 , 037/ - AND FEES AND LEGAL E XPENSES OF 11 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT RS.1,10,200 - (TOTALLING TO RS.13,57,400/ - ) HAVE BEEN DISALLOW ED HOLDING THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40(A) (I A) OF THE IT ACT AND THAT THE AO HAS LEVIED PENALTY ON THE SAID AMOUNT BEING FULLY SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULA RS OF ITS INCOME TO THE EXTENT OF RS.13,57,400/ - AND TREATING IT TO BE A FIT CASE FOR LEVYING PENALTY. THE ASSESSEE ALSO SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCS PVT. LTD. , 2010 - TIOL - 21 - SC - LL IN SLP (C) NO.27161 OF 2008 DATED 1 7TH MARCH, 2010 (PB - 4) WHEREIN IT HAS EEN HELD AS UNDER: INCOME TAX - 271(1)(C) - MERELY BECAUSE THE ASSESSEE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NOT ACCEPTABLE TO THE REVENUE , THAT BY I TSELF WOULD NOT, ATTRACT PENALTY UNDER SECTION 271(1) (C): B Y ANY STRETCH OF IMAGINATION, MAKING AN IN CORRECT CLAIM IN LAW CANNOT TAN TAMOUNT TO FURNISHING INACCURATE PARTICULARS. 6.1 THE ASSESSEE F URTHER REFERRED TO THE DECISION OF I TAT DELHI A BENCH IN THE CASE OF D CIT VS ASIAN HOTELS LTD. 2011 - TIOL - 795 - ITAT - DEL (ITA NO .3820/DEL/2010 DATED JANUARY.7, 2011 ( PB - 1) WHEREIN IT HAS BEEN HELD AS U NDER: INCOME TAX - SE CTIONS 40(A) (IA), 271 (1) (C) - WHETHER PENALTY IS LEVIABLE IN A CASE WHERE THE SUBSTANTIAL RETURNED INCOME PROVES THE BONA TIDE OF ASSESSEE VIS - - VIS DISALLOWANCE OF 40(A) (IA). ASSESSEE COMPANY F ILED ITS RETURN OF INCOME ON 22 ND DECEMBER 2003 DECLARING AN INCOME OF RS.6.32 CRORES. AN ASSESSME NT WAS PASSED U/S 143(3) ON 3 0 TH MARCH 2006 WHEREBY TOTAL INCOME OF THE ASSESS EE HAS BEEN DETERMINED AT RS. I 1.53CRORES. DURING THE COURSE OF ASSESSMENT PROCEEDING LD. AO FOUND THAT THE ASSESSEE HAD MADE THE PROVISIONS IN RESPECT OF CERTAIN FOREIGN PAYMENTS A ND CLAIMED THESE PROVISION S WIT HO T DEDUCTING CORRESPONDING TDS. AO DISALLOWED THIS CLAIM OF ASSESSEE AND LEVIED PENALTY UNDER SECTION 271(1)(C )RELYING UPON THE DECISION OF RELIANCE (2010 - TIOL - 21 - SC - II) CIT(A) DELETED THE PENALTY - MATTER REACHED TO THE ITAT. AF TER HEARING THE PAR TIES THE ITA T HELD AS UNDER, ++ THERE IS NO DOUBT THAT THE CLAIM MADE BY THE ASSESSEE IS IN RESPECT OF BUSINESS EXPENSES. HAD THE ASSESSEE DEDUCTED THE TDS AND PAID IT TO THE GOVT. AMOUNT THEN ITS DEDUCTION COULD BE ALLOWED. ACCORDING TO THE ASSESSEE IT HAS PAID THE TAX ALSO IN THE NEXT YEAR FOR THE SUM OF RS.7,07,294/ - AND EVEN THEREAFTER 12 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT DEDUCTION WAS NOT GRANTED TO IT. LD. FI RST APPELLATE AUTHORITY HAS ACCEPTED THE PLEA OF ASSESSEE THAT IT WAS A BONAFIDE ERROR; ++ TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES PARTICULA R LY THE AMOUNT OF DISALLOWANCE VI S A VIS THE RETURNED INCOME, WE ARE OF THE VIEW THAT IT IS A BONAFI DE LAPSE AT THE END OF THE ASSESSEE. THERE IS NO DELIBERATE ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME. LD. CIT(A) HAS RIGHTLY APPRECIATED THE FACTS AND C IRCUMSTANCES WE DO NOT SEE ANY REASON TO INTERFERE IN HIS ORDER. THE ASSESSEE FURTHER SUBMITTED THAT THE FACTS IN THE ABOVE CASE ARE IDENTICAL TO THAT OF THE PRESENT CASE OF THE ASSESSEE AND THE ISSUE IS COVERED BY THE ABOVE DECISION. 6.2 THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF TAT HYDERABAD A BENC H DATED 17TH JUN E, 2010 IN THE CASE OF ACIT VS MIS. SEAWAYS SHIPPING LTD. IN ITA NO.80/H/20 1 1 FOR AY 2005 - 06 (PB 9 TO 11) WHEREIN ALSO IDENTICAL ISSUE HAS BEEN DECIDE D BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE PARA 5 OF ITS ORDER BY HOLDING AS UNDER: AT THE TIME OF HEARING ON 16.6.2011, NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THE DEPARTMENTAL REPRESENTATIVE. I N THIS CASE, PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S 40(A) (IA) OF THE INCOME TAX ACT. NON DEDUCTION OF TDS BY THE ASSESSEE WAS RESULTED I N DISALLOWANCE OF EXPENDITURE U/S 40 (A) (IA), THAT ITSELF CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME .THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTED IN DISALL OWANCE OF EXPENDITURE. I N OUR OPINION, THE MISTAKE COMMITTED BY THE ASSESSEE WAS COMPENSATED BY DISALLOWING THE EXPENDITURE. FURTHER, THE REVENUE CANNOT PENALIS E THE ASSESSEE BY LEVYING PENALTY U/S 271 (1) (C) OF THE ACT. IN ORDER TO LEVY PENALTY U/S 271 (1) (C) OF THE ACT, THERE HAS TO BE CONCEALMENT OF PARTICUL ARS OF INCOME OF THE ASSESSEE OR THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF ITS INCOME . PRESENT IS NOT THE CASE OF CONCEALMENT OF INCOME OR IT IS NOT THE CASE OF REVENUE THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. THE DEPARTMENT HAS NOT FOUND OUT THAT THE ASSESSEE HAS FURNISHED ANY FACTUAL INCORRECT INFORMATION AND THE ASSESSEE IS NOT GUILTY OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN OUR OPINION, THE CONDITIONS LAID DOWN IN SECTION 271(1) (C) OF THE ACT IS NOT COMPLIED WITH. BEING SO, LEVY OF PENALTY IS NOT JUSTIFIED MERELY BECAUSE THE ASSESSEE HAS CLAIMED CERTAIN EXPENDITURE THAT EXPENDITURE IS NOT 13 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT ELIGIBLE IN VIEW OF THE PROVISIONS OF SECTION 40(A) (IA) OF THE ACT AND FOR THAT REASON, EXPENDITURE IS DISALLOWED. PENALTY CANNOT BE LEVIED FOR MERE MAKING OF A CLAIM OF EXPENDITURE WHICH IS NOT SUSTAINABLE AND DELETION OF PENALTY BY THE LEARNED CIT(A) IS JUSTIFIED. WE PLACE RELIANCE ON THE JUDGMENT OF THE HONBL E SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS (P) LTD. (322 1TR 158 (SC).ACCORDINGLY THE GROUND RAISED BY THE REVENUE HOLDS NO MERIT. 6.3 THE LEARNED DR IN HIS REJOINDER HAS NOT PRODUCED ANY MATERIAL TO CONTROVERT THE AFORESAID SUBMISSIONS OF THE ASSESSEE. [ 7. IN VIEW OF ABOVE DISCUSSIONS AND THE DECISIONS CITED BY THE ASSESSEE, WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE. WE ARE OF THE VIEW THAT THE LEARNED CIT(A) ON PROPER APPRECIATION OF THE FACTS OF THE CASE, CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE CITATIONS REFERRED TO BY THE ASSESSEE BEFORE HIM, HAS RIGHTLY DELETED THE PENALTY AND WE FIND NO JUSTIFICATION TO I NTERFERE IN THE ORDER OF THE LEARNED CIT(A) DELETING THE PENALTY IN THE MATTER IN THE ABSENCE OF ANY MATERIAL PRODUCED BY THE LEARNED DR TO CONTROVERT THE SAME. WE CONFIRM HIS FINDINGS. THERE IS NO MERIT IN THE GROUND OF APPEAL OF THE REVENUE. THE SAME IS ACCORDINGLY DISMISSED. WE FIND THAT IN THE CASE OF HAND THE PENALTY IS LEVIED FOR DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) OF THE IN COME TAX ACT. NON DEDUCTION OF TDS BY ASSESSEE HAS RESULTED INTO DISALLOWANCE OF EXPENDITURE U/S. 40(A)(IA) THAT ITSELF CANNOT BE CONSTRUED AS FURNISHING INACCURATE PARTICULARS OF INCOME OR CONCEALMENT O F INCOME. THE ASSESSEE HAS FAILED TO DEDUCT TDS WHICH RESULTED INTO DISALLOWANCE OF EXPENDITURE. IN OUR OPINION, THE ASSESSEE HAS AGREED FOR DIS ALLOWANCE THE EXPENDITURE BUT IN THE INSTANT CASE THE ASSESSEE HAS ALSO PAID TAX ON AGREED ADDITION AND PENALTY HAS ALSO BEEN PAID. IN OUR OPINION, WHEN THE ASSESSEE HAS NOT FURNISHED AN Y FACTUAL LY INCORRECT INFORMATION , ASSESSEE IS NOT GUILTY OF FURNISHIN G THE INACCURATE PARTICULARS OF INCOME. WE ARE OF THE VIEW TH A T IT IS NOT AS CASE OF CONCEALMENT OF INCOME ALSO U/S. 271(A)(C). THEREFORE, WE ARE RESPECTFULLY FOLLOWING THE DECISION OF CO - ORDINATE BENCH WE ARE OF THE VIEW THAT PENALTY CANNOT IMPOSED U/S. 2 71(1)(C) OF THE ACT. HENCE, WE ALLOW THE APPEAL OF THE ASSESSEE. 14 . ITA NO. 54/PNJ/2012(A.Y.2007 - 08) TARADE BROTHERS CONSTRUCTIONS PVT. LTD. VS. CIT 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONO UNCED I N THE OPEN COURT ON 17 .04. 2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 17 .04 .2014 P.S. - *PK* COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER